The second non-farm payrolls report since the war has exceeded expectations and has great potential, but there are still hidden concerns.
2026-05-07 21:54:02
On Friday evening (May 8) at 8:30 PM Beijing time, the U.S. Department of Labor will release the April non-farm payroll data, which will be the second non-farm payroll data since World War II.
Looking back at the March non-farm payrolls, the performance was strong, reversing the downward trend of February. February recorded a weak performance with a decrease of 133,000 jobs, while March saw a significant increase of 178,000 jobs. Manufacturing employment even reversed from a decrease of 6,000 jobs to an increase of 15,000 jobs, and the unemployment rate fell from 4.4% to 4.3%.
This impressive performance is a far cry from the market's previous conservative expectation of only 60,000 employees.
As the March non-farm payrolls report was released on Good Friday, the S&P 500 rose 29 points on the first trading day after the holiday, and the 10-year US Treasury yield also rose slightly by 0.022%, directly reflecting the market's positive recognition of the resilience of the employment situation.
Since the US government shutdown began on February 14, the initial negative impacts have been gradually digested, and the marginal recovery in fundamentals has provided strong support for the March non-farm payrolls.
Looking back at the government shutdown period from October to November last year, non-farm payrolls plummeted by 140,000 in October, but quickly rebounded by 41,000 in November. This historical pattern clearly demonstrates the strong resilience of the job market and provides a reliable reference for the strong non-farm payrolls in April.
The current market consensus on the April non-farm payrolls is clear: 62,000 new non-farm jobs, 5,000 new manufacturing jobs, and the unemployment rate remaining unchanged at 4.3%.
However, multiple leading indicators collectively released positive signals, suggesting that this expectation may be significantly underestimated, and the recovery of the job market may be far greater than the market anticipated.
The ADP national employment data released this morning was a pleasant surprise: 109,000 new jobs were added in April, a significant improvement from the revised increase of 61,000 in March (the initial ADP figure for March was also slightly revised downward).
Although the ADP report has been largely downplayed by the market due to its weak correlation with non-farm payrolls in recent years and frequent sharp corrections, the April increase this year hit a new high since March 2025. Based on historical correlation patterns, Friday's non-farm payrolls are expected to reach 100,000 new jobs, a stark contrast to the current market expectation of 62,000.
The latest report from the U.S. Department of Labor on Thursday offered a slightly positive signal, with unemployment claims data showing a "double breakthrough" improvement.
The four-week moving average of initial jobless claims fell to 203,250, a significant decrease of 4,500 from the previous week. This key indicator, which smooths out weekly fluctuations, clearly demonstrates the solid medium- to long-term resilience of the labor market and that layoffs continue to converge to a low level.
The number of people continuing to claim unemployment benefits fell by 10,000 to 1.77 million in the week ending April 25, a recent low, indicating that the re-employment process for the unemployed has accelerated significantly.
One decrease reflects "fewer layoffs" and the other reflects "accelerated re-employment," and the resonance of these two data points provides some support for the strong non-farm payrolls in April.
While there are some local concerns about the employment situation, their drag on the overall trend is likely to be limited.
The employment component of the US Institute for Supply Management's manufacturing PMI fell to 46.4 in April from 48.7 in March. The fact that it remained below the 50-point threshold indicating contraction and that the contraction widened suggests underlying concerns about the employment situation.
The JOLTS job openings data showed a slight weakening trend, with the number of job openings in March falling to 6.866 million from 6.882 million in February, but still exceeding market expectations.
However, even if the employment sub-index of the manufacturing PMI weakens, its impact on non-farm payrolls will still be limited based on its historical correlation with non-farm payrolls.
The Challenger layoff report sends a clear negative signal: U.S. companies announced 83,400 layoffs in April , a 38% surge from 60,600 in March, marking the highest level since January 2026.
At the industry level, technology has become the hardest hit area for layoffs, with 33,400 layoffs in April alone, bringing the cumulative number of layoffs this year to 85,400, an increase of 33% year-on-year. Artificial intelligence has been the primary cause of layoffs for the second consecutive month, with 21,500 AI-related layoffs in April, accounting for 26% of the total number of employees that month, and nearly 50,000 AI-related layoffs this year.
In addition, the government and pharmaceutical industries also laid off 9,149 and 7,440 people respectively.
Overall, this round of layoffs is concentrated in sectors such as technology and pharmaceuticals, which are affected by technological iterations and industry cycles. Employment in essential service industries remains stable. This is a structural adjustment rather than a weakening of the entire economy, and only constitutes a short-term emotional disturbance.
Based on a comprehensive analysis of various forward-looking indicators, there is a clear divergence between bullish and bearish sentiment in the market.
On the positive side, both the four-week moving average of initial jobless claims and continuing jobless claims have declined, indicating a solid medium- to long-term resilience in the employment market; the ADP employment data showed a significant rebound, coupled with the historical rebound pattern after government shutdowns, all of which provide upward support for non-farm payrolls.
Negative factors should not be ignored either. The employment sub-index of the manufacturing PMI continued to contract, job vacancies at JOLTS declined slightly, and Challenger layoffs increased significantly month-on-month. The structural pressure of layoffs brought about by technology and AI substitution is intensifying, which to some extent hinders the recovery of employment.
Overall, the market's conservative expectation of 62,000 jobs may be exceeded, but due to structural layoffs in the industry and weak employment in the manufacturing sector, non-farm payrolls are unlikely to see a significant surge, and are more likely to see a moderate recovery and a slight increase above expectations.
Meanwhile, the geopolitical rivalry between the US and Iran, as well as the shipping situation in the Strait of Hormuz, will continue to influence short-term fluctuations in the US dollar, crude oil, and major asset classes. Traders need to consider the dual impact of data releases and geopolitical events.
Looking back at the March non-farm payrolls, the performance was strong, reversing the downward trend of February. February recorded a weak performance with a decrease of 133,000 jobs, while March saw a significant increase of 178,000 jobs. Manufacturing employment even reversed from a decrease of 6,000 jobs to an increase of 15,000 jobs, and the unemployment rate fell from 4.4% to 4.3%.
This impressive performance is a far cry from the market's previous conservative expectation of only 60,000 employees.
As the March non-farm payrolls report was released on Good Friday, the S&P 500 rose 29 points on the first trading day after the holiday, and the 10-year US Treasury yield also rose slightly by 0.022%, directly reflecting the market's positive recognition of the resilience of the employment situation.
Historical patterns of government shutdowns: A rebound in employment is inevitable after the negative impact is digested.
Since the US government shutdown began on February 14, the initial negative impacts have been gradually digested, and the marginal recovery in fundamentals has provided strong support for the March non-farm payrolls.
Looking back at the government shutdown period from October to November last year, non-farm payrolls plummeted by 140,000 in October, but quickly rebounded by 41,000 in November. This historical pattern clearly demonstrates the strong resilience of the job market and provides a reliable reference for the strong non-farm payrolls in April.
April Non-Farm Payrolls: Market Expectations of 62,000 Leading Indicator Suggests Potential Underestimation
The current market consensus on the April non-farm payrolls is clear: 62,000 new non-farm jobs, 5,000 new manufacturing jobs, and the unemployment rate remaining unchanged at 4.3%.
However, multiple leading indicators collectively released positive signals, suggesting that this expectation may be significantly underestimated, and the recovery of the job market may be far greater than the market anticipated.
ADP data makes a comeback: from "limited reference" to "the strongest forecast".
The ADP national employment data released this morning was a pleasant surprise: 109,000 new jobs were added in April, a significant improvement from the revised increase of 61,000 in March (the initial ADP figure for March was also slightly revised downward).
Although the ADP report has been largely downplayed by the market due to its weak correlation with non-farm payrolls in recent years and frequent sharp corrections, the April increase this year hit a new high since March 2025. Based on historical correlation patterns, Friday's non-farm payrolls are expected to reach 100,000 new jobs, a stark contrast to the current market expectation of 62,000.
Unemployment claims data shows a double decline, setting a new record: reduced layoffs and accelerated re-employment provide strong support.
The latest report from the U.S. Department of Labor on Thursday offered a slightly positive signal, with unemployment claims data showing a "double breakthrough" improvement.
The four-week moving average of initial jobless claims fell to 203,250, a significant decrease of 4,500 from the previous week. This key indicator, which smooths out weekly fluctuations, clearly demonstrates the solid medium- to long-term resilience of the labor market and that layoffs continue to converge to a low level.
The number of people continuing to claim unemployment benefits fell by 10,000 to 1.77 million in the week ending April 25, a recent low, indicating that the re-employment process for the unemployed has accelerated significantly.
One decrease reflects "fewer layoffs" and the other reflects "accelerated re-employment," and the resonance of these two data points provides some support for the strong non-farm payrolls in April.
Weak components dragging down non-farm payrolls: hidden concerns?
While there are some local concerns about the employment situation, their drag on the overall trend is likely to be limited.
The employment component of the US Institute for Supply Management's manufacturing PMI fell to 46.4 in April from 48.7 in March. The fact that it remained below the 50-point threshold indicating contraction and that the contraction widened suggests underlying concerns about the employment situation.
The JOLTS job openings data showed a slight weakening trend, with the number of job openings in March falling to 6.866 million from 6.882 million in February, but still exceeding market expectations.
However, even if the employment sub-index of the manufacturing PMI weakens, its impact on non-farm payrolls will still be limited based on its historical correlation with non-farm payrolls.
Challenger layoffs unexpectedly surge, highlighting the industry's structural differentiation.
The Challenger layoff report sends a clear negative signal: U.S. companies announced 83,400 layoffs in April , a 38% surge from 60,600 in March, marking the highest level since January 2026.
At the industry level, technology has become the hardest hit area for layoffs, with 33,400 layoffs in April alone, bringing the cumulative number of layoffs this year to 85,400, an increase of 33% year-on-year. Artificial intelligence has been the primary cause of layoffs for the second consecutive month, with 21,500 AI-related layoffs in April, accounting for 26% of the total number of employees that month, and nearly 50,000 AI-related layoffs this year.
In addition, the government and pharmaceutical industries also laid off 9,149 and 7,440 people respectively.
Overall, this round of layoffs is concentrated in sectors such as technology and pharmaceuticals, which are affected by technological iterations and industry cycles. Employment in essential service industries remains stable. This is a structural adjustment rather than a weakening of the entire economy, and only constitutes a short-term emotional disturbance.
Overall Summary: The non-farm payrolls report shows a moderate recovery pattern amidst the interplay of bullish and bearish signals.
Based on a comprehensive analysis of various forward-looking indicators, there is a clear divergence between bullish and bearish sentiment in the market.
On the positive side, both the four-week moving average of initial jobless claims and continuing jobless claims have declined, indicating a solid medium- to long-term resilience in the employment market; the ADP employment data showed a significant rebound, coupled with the historical rebound pattern after government shutdowns, all of which provide upward support for non-farm payrolls.
Negative factors should not be ignored either. The employment sub-index of the manufacturing PMI continued to contract, job vacancies at JOLTS declined slightly, and Challenger layoffs increased significantly month-on-month. The structural pressure of layoffs brought about by technology and AI substitution is intensifying, which to some extent hinders the recovery of employment.
Overall, the market's conservative expectation of 62,000 jobs may be exceeded, but due to structural layoffs in the industry and weak employment in the manufacturing sector, non-farm payrolls are unlikely to see a significant surge, and are more likely to see a moderate recovery and a slight increase above expectations.
Meanwhile, the geopolitical rivalry between the US and Iran, as well as the shipping situation in the Strait of Hormuz, will continue to influence short-term fluctuations in the US dollar, crude oil, and major asset classes. Traders need to consider the dual impact of data releases and geopolitical events.
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